When banks send money today, the sender’s identity goes with it. Known as the “travel rule,” it faced significant controversy and opposition when it was introduced in the 90s. Crypto is livin
When banks send money today, the sender’s identity goes with it. Known as the “travel rule,” it faced significant controversy and opposition when it was introduced in the 90s.
Crypto is living through that controversy again, and Amanda Wick, head of Americas at VerifyVASP, has seen it through several different lenses. She spent nearly a decade as a DOJ money-laundering prosecutor and with FinCEN as a policy advisor and spoke with TheStreet Roundtable about why this is a critical issue for institutional adoption.
Crypto’s adoption has been the opposite of traditional finance, starting with transparency of transactions first and identity last. But in order for institutions to engage with the space, they need to be able to attach the who to transactions.
Related: Exclusive: Peter Schiff says the Fed 'never should have stopped hiking'
Incorrect identity data, or none at all, poses a problem for law enforcement.
"If you think about what happens when that information is not correct, which is sometimes called the Mickey Mouse problem. FATF (Financial Action Task Force) found that a lot of tools were allowing people to put in Elon Musk. If every time we send money to each other, I say I'm sending it to Elon Musk and somebody's defrauded, and it looks like Elon Musk is defrauding everyone in the world, that's not that useful for law enforcement," Wick explained.
The scale of what's slipping through those fake names is not small. FATF's most recent targeted update on virtual assets flagged persistent gaps in travel-rule implementation alongside an estimated $51 billion in on-chain fraud and scam activity in 2024, with scammers increasingly professionalized.
Address formats also differ across jurisdictions.
“Some jurisdictions' address might not be in the same common format," Wick explained. “This is where some jurisdictions really need to work on digital ID hand in hand with these things."
Wick's favorite way to explain crypto's compliance fight is to point out that banking already had it in the opposite direction.
"Swift existed and then the travel rule came later," she said. "It was actually really hard to get people into Swift voluntarily until there was a rule that said you have to do this."
The infrastructure came first. Identity requirements were added afterward, despite objections, because regulators insisted.
“Crypto is the opposite," Wick said. "If you think about how crypto originated, it’s cypherpunk, anonymous free-flow-of-money roots. It's actually very difficult to get crypto to move into the more regulated conceptual space of tying identity to those transactions."
The resistance runs deep enough that she hears it inside the compliance industry itself.
"I talk to people who are actually at regtech companies, and even they will sometimes say, I hate the travel rule. It goes very counter to the ethos of the origins of crypto," she said.
Underneath the culture clash is a clean structural inversion. Traditional finance is very much an identity based system, with KYC being a requirement to open a bank or brokerage account at any financial institution.
Crypto started with transaction visibility. Every single transaction on a public blockchain is publicly available to anyone who cares to look, but unless you already know whose wallet is whose, there is no way to attach identity to them.
Wick argues that this is a major unlock for law enforcement. "When you add travel rule information to an insanely visible transactional world, it actually becomes very, very effective for anti-money-laundering and counter-terrorist-financing analysis. Now you're able to do amazing things that TradFi wishes it could do in terms of fraud prevention."
Accurate travel data, according to Wick, has helped drop impersonation scams to “near-zero.”
She was not totally dismissive of anonymity purists, saying "That sounds great when it's somebody being persecuted, or you're in a foreign country and you need to get money instantly. But if you're Al-Shabaab, if you're a terrorist organization, now that factual scenario is a little bit different. We really care who is using that tech."
The alternative pitch, she noted, is asking banks to embrace the anonymous free flow of money, “Post 9/11, which no banker’s ever gonna go for.”
This framing collapses one of crypto's longest-running arguments into a single trade. The industry already gave the world something banking never had: total, permanent transaction visibility. Adding identity is the final step that makes that visibility useful to everyone except criminals.
